Stocks End 2-Day Losing Streak, Climb on Positive Housing Data

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Stocks staged a final-hour comeback to close in positive territory in choppy trading on Friday, putting an end to two days of sharp declines, but the Dow and S&P 500 still ended lower for the week.

The Dow Jones Industrial Average closed unofficially 44 points ahead, the S&P 500 rose 7 points and the Nasdaq added 21 points.

"We're likely to see a continuation in volatility and price action, though the longer-term charts seem to say that the overall trend is still up," said Joe Bell, senior equity analyst at Schaeffer's Investment Research. "Compared to the previous pullbacks, volume has also been extremely light, which is a concern. Usually, you want to see the selling climax, but in this case, this perhaps means that people haven't been extremely fearful."

Housing starts jumped 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, according to the Commerce Department. The reading was the best since November 2013. And building permits hit their highest level since 2008.

Meanwhile, consumer sentiment slipped to 81.8 in May, according to the Thomson Reuters/University of Michigan's preliminary reading. The reading was down from 84.1 from the month before and was also below the expectation of 84.5 among economists polled by Reuters.

St. Louis Federal Reserve President James Bullard said he sees inflation picking up in the near future and approach the central bank's 2-percent target. He added that he considers the neutral Fed funds rate to be 4 percent, factoring in 2-percent inflation.

JCPenney shares spiked over 16 percent after the retailer posted a smaller-than-expected quarterly loss but topped revenue expectations. At least six brokerages raised their price targets on JCPenney.

Nordstrom shares surged more than 14 percent after the department store chain beat earnings expectations and said it would seek a partner for its credit card receivables, currently totaling about $2 billion.

But General Motors stock slipped 1 percent as the automaker said it entered into consent decree with the government over its ignition switch recall. The automaker will pay a $35 million fine.

European shares failed to bounce back after Thursday's global selling, which was prompted by anxiety over slow growth, low inflation and hefty valuations. U.S. shares fell on Wednesday and Thursday, with the Dow down in triple digits.